3. Financial Services

Question 1

General prohibition

Answer 1

19(1) FSMA

Question 2

What is the general prohibition under 19(1)

Answer 2

Against carrying out regulated activity unless authorised or exempt

Question 3

Where is ‘regulated activity’ for 19(1) defined

Answer 3

22(1)

Question 4

What is a ‘regulated activity’ per 22(1) FSMA

Answer 4

Specified activity carried on by way of business and relating to specified investment

Question 5

What part of what document covers specified investments

Answer 5

Part III RAO

Question 6

What part of what document covers specified activities

Answer 6

Part II RAO

Question 7

Some examples of specified investments under Part III RAO

Answer 7

Cs of insurance, shares, instruments creating indebtedness and RMCs

Question 8

Where are RMCs defined

Answer 8

61(3)

Question 9

What is an example of an instrument creating indebtedness

Answer 9

Bonds

Question 10

What is an example of some specified activities under Part II RAO

Answer 10

Dealing in investments as principal, arranging/managing investments, safeguarding + administering investments, and advising on merits

Question 11

What is an example of when a solicitor may be dealing in investments as an agent

Answer 11

Power of Attorney

Question 12

When might solicitor be considered to be managing investments

Answer 12

Exercising discretion over investments

Question 13

Is it a specified activity under Part II RAO if S only safeguarding investment - not administering

Answer 13

No

Question 14

What is not considered to be ‘advising on merits’

Answer 14

Only giving generic advice/info

Question 15

What do you need to be ‘advising on merits’ under Part II RAO

Answer 15

Opinion + recommendation

Question 16

What to do after finding out activity and instrument are specified

Answer 16

See if regulated activity is excluded

Question 17

Where to look first for exclusions of regulated activities

Answer 17

Specific exclusions in same part, then look for cross-references

Question 18

Three general exclusions to regulated activities

Answer 18

66, 67 and 70

Question 19

Article 66 RAO exclusion covers what?

Answer 19

Acting as T/PR

Question 20

Article 67 RAO exclusion covers what?

Answer 20

RA necessary part of other services

Question 21

Article 70 RAO exclusion covers what?

Answer 21

RA in connection w/ sale of body corporate

Question 22

What must you be careful of when applying Article 66 as an exclusion

Answer 22

Specific conditions apply based on activity - e.g. for Article 25, S must = co-T/PR

Question 23

When does Article 67 exclusion NOT apply

Answer 23

If remunerated separately from service to which it is necessary

Question 24

What is considered to be ‘necessary’ for Article 67 to apply

Answer 24

Other, main service is impossible without that service

Question 25

What is considered to be a 'sale of a body corporate' for Article 70 RAO exclusion to apply

Answer 25

If purchasers are buying 50%+ of shares, or acquiring day-to-day control

Question 26

Who can S refer client to and in order for them to do what, in order for RA to be exempt

Answer 26

To an authorised person either to deal through AP, or arrange deals through them

Question 27

When does the exemption of referring client to AP not apply

Answer 27

If commission received by S w/o accounting to client

Question 28

What kind of activities do many exemptions NOT apply to?

Answer 28

Insurance mediation activities

Question 29

What are 'insurance mediation activities'?

Answer 29

Cs of insurance

Question 30

What shows that a particular exemption does not apply to insurance mediation activities

Answer 30

'Subject to Article 4(4A)'

Question 31

If FSMA applies, what happens?

Answer 31

S must be directly authorised and comply w/ FCA Handbook, or be supervised by DPB (SRA)

Question 32

What two frameworks apply to dodge direct authorisation and alternatively be supervised under FSMA

Answer 32

327 FSMA and SRA Scope Rules

Question 33

Rules under 327 FSMA

Answer 33

Member of profession, no commission w/o accounting, SA incidental and S complies w/ SRA Scope Rules

Question 34

SRA Scope Rule 4 requires what

Answer 34

Activity arises out/complimentary, incidental and account for any pecuniary advantage

Question 35

What is considered 'complementary' under SRA Scope Rule 4

Answer 35

Not separate fee quote nor undertaken in isolation - arises naturally

Question 36

What is considered 'incidental' under SRA Scope Rule 4

Answer 36

RA only small part of firm and not conducted in isolation

Question 37

What is the rule on commission under SRA Scope Rule 4

Answer 37

Client has right to commission, but can give informed consent for firm to keep

Question 38

What must S also consider if SRA Scope Rule 4 + 327 apply?

Answer 38

Additional restrictions under Scope Rule 5

Question 39

Four key further restrictions under SRA Scope Rule 5

Answer 39

RIPs, PPSs, securities and IMAs

Question 40

What is included in RIPs per SRA Glossary

Answer 40

Life insurance policies

Question 41

What can S do in the case of RIP to ensure client not relying on firm as to merits

Answer 41

Send client written confirmation (Rule 8 SRA CoB)

Question 42

What is a security under SRA Scope Rule 5.3?

Answer 42

Shares

Question 43

What is a CBI under SRA Scope Rule 5.3?

Answer 43

Insurance C, option and futures

Question 44

What can S not do under Scope Rule 5.3?

Answer 44

Recommend client individual to buy/subscribe for security/CBI

Question 45

What is an IMA under SRA Scope Rule 5.6?

Answer 45

Cs of insurance or life policies

Question 46

What is the restriction on IMAs under SRA Scope Rule 5.6?

Answer 46

Firm cannot deal/arrange IMAs unless on FCA Register, appoint XO and comply w/ SRA CoB Rules

Question 47

Even if 19(1) FSMA does not apply for whatever reason, what must S keep in mind in terms of their own expertise + P(4) BI of client

Answer 47

If they have necessary skills and competence (O(1.4 - 1.5))